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CESR finds huge variation in fines for MiFID non-compliance

17 February 2009

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The Committee of European Securities Regulators (CESR) has published a review of supervisory powers and practices, and administrative and criminal sanctioning regimes across Europe in relation to MiFID. It found greater convergance of approaches to regulating markets and MTFs than for investment firms. And it found administrative and criminal fines for non-compliance with the directive differ massively from country to country.

The review shows that 23 out of 28 jurisdictions may impose administrative fines for infringement of any of the provisions in MIFID, while four jurisdictions only impose administrative fines for violation of some provisions.

Only one jurisdiction does not impose administrative fines at all. There is no convergence between the jurisdictions on administrative fines, as they vary from €12,500 (as the lowest maximum amount of administrative fines in Luxembourg) to about €5 million (as the highest maximum amount in Sweden) and even up to unlimited fines in Denmark and the United Kingdom.

On the criminal side, fines range from €5,000 (as the lowest maximum amount of in Bulgaria) to about €16 million (as the highest maximum amount in Estonia) and can extend to unlimited criminal fines in the Czech Republic, Germany, Denmark, Finland, Island, Norway and the United Kingdom.

Criminal sanctions may include imprisonment, which generally ranges from a maximum of four months in Denmark to a maximum of 10 years in Ireland and Bulgaria, depending on the infringement. The ability to imprison individuals for the infringement of MiFID provisions is more prolific with regards to unauthorised provision of investment services and activities than for the infringement of any other MiFID provision.

For the unauthorised provision of investment services by investment firms the majority of CESR Members provide administrative measures, administrative fines and criminal sanctions. However, for infringements of the other provisions of MiFID, the majority of CESR Members can only impose administrative measures and administrative fines, but no criminal sanctions.

Victoria Powell, director of communications at CESR, notes that there has been a number of fines administered for MiFID non-compliance across the member states, and that it has begun collecting data on these, but that it is difficult to aggregate and report on this data in a meaningful way.

CESR says it has passed the MiFID Mapping Report to the European Commission, the ECOFIN Council and the ECON Committee of the European Parliament for consideration, and is using the findings to direct its own efforts to improve convergence.